Jones Lang LaSalle – Lodginghttp://lodgingmagazine.com
Official Publication of the AH&LAWed, 13 Dec 2017 18:42:28 +0000en-UShourly1https://wordpress.org/?v=4.9.1JLL Managing Director Breaks Down Barriershttp://lodgingmagazine.com/jll-managing-director-breaks-down-barriers/
http://lodgingmagazine.com/jll-managing-director-breaks-down-barriers/#respondThu, 30 Jun 2016 13:21:42 +0000http://lodgingmagazine.com/?p=25939It’s not even half over, but 2016 has already been a whirlwind year for Gilda Perez-Alvarado, managing director at Jones Lang LaSalle (JLL). As of Jan. 1, she took on the role of head of Global Hotels Desk for JLL’s Hotels & Hospitality Group, a culmination of 12 years of work for the real estate advisor. Then, only weeks later, she was honored with the Jack A. Shaffer Financial Advisor of the Year Award at ...

]]>It’s not even half over, but 2016 has already been a whirlwind year for Gilda Perez-Alvarado, managing director at Jones Lang LaSalle (JLL). As of Jan. 1, she took on the role of head of Global Hotels Desk for JLL’s Hotels & Hospitality Group, a culmination of 12 years of work for the real estate advisor. Then, only weeks later, she was honored with the Jack A. Shaffer Financial Advisor of the Year Award at the Americas Lodging Investment Summit (ALIS). Perez-Alvarado is the first woman to receive this award, a detail she became aware of very quickly.

“The outpour of support after the ceremony from female executives and ladies all over the industry was just amazing,” Perez-Alvarado describes. “You know, sometimes you lose a little bit of perspective of what your career means, not just for you, but for other people like yourself, like women and minorities.”

With a strong background in hospitality—she attended the Cornell School of Hotel Administration—and more than a decade of experience in hotel brokerage, Perez-Alvarado has a very unique, global perspective on the lodging industry. “If you’re looking to achieve a certain level of growth, you have to look beyond domestic opportunities. Europeans do business very differently than we do, and Asian and Middle Eastern investors have their own methods as well,” she explains.

And Perez-Alvarado is encountering foreign investors more and more often, especially those looking to acquire assets in the United States. “Right now our country has a very strong economy, so there is quite a bit of strategic capital coming in,” she says. “Additionally, our currency is getting stronger, and that is a huge financial motivator, especially for Chinese investors.”

Perez-Alvarado notes that China is one of the United States’ biggest hospitality investors at this point in time because China is currently experiencing a very strong outbound tourism boom. Last year, mainland Chinese outbound funds into global hotel real estate grew five-fold to $5.3 billion, and the expectation is that 2016 will see a meaningful year-over-year increase, with the U.S. being the main beneficiary. “Simply put, investors want to invest where their people are going,” she adds.

Additionally, the United States also offers foreign investors a very transparent and liquid investment market. “We might be the most transparent market in the world,” she explains. “So naturally there’s quite the gravitation for people to move money away from their borders and into the States, which is further strengthening our economy.”

Being able to work with investors all over the world is one of Perez-Alvarado’s favorite aspects of her career, especially when it’s done on a more personal level. “Deals made with foreign investors are often brokered with individuals who have their own wealth, rather than with companies,” she says. “These people aren’t pressured to spend their money a certain way, like a domestic institution would be, so doing business with them is very different than doing business in the States. I almost have to take a private banking approach, which makes things more personal and enjoyable.”

Beyond personalized deals with individual private investors, Perez-Alvarado also enjoys brokering high-profile trophy assets in the United States and abroad. These properties are a little different in that the people and organizations investing in them are looking for a long-term commitment. “These are lower-yielding assets with a pretty stable value, but they’re ‘forever acquisitions,’” Perez-
Alvarado explains. “These assets definitely require a different type of buyer.”

Perez-Alvarado has extensive experience with deals having to do with trophy assets, but one deal in particular sticks out in her mind—the sale of the JW Marriott Essex House New York in 2012. Sold to Strategic Hotels & Resorts and KSL Capital Partners for $362 million, this deal won “Single Asset Transaction of the Year” at ALIS in 2013. “It’s my most favorite assignment to date,” she says.

With continued recognition from her peers, Perez-Alvarado has adopted a new outlook on her career. “Things have definitely changed,” she says. “There’s more of a media presence around my work and people are more aware of what I’m doing, rather than just being an anonymous broker. It’s great, and I’m so busy, and as a woman, I’m making a statement. It’s a very exciting time.”

Think ahead. “Be mindful of when in the cycle you’re buying and who your main stakeholders are. And if you’re looking at a trophy asset, be sure this is a property you want to hold long term.”

Consider the relationships. “Hotels are a very complex form of real estate. You have to think about your relationship with management, your relationship to the brand, your relationship to the owners, and the dynamics of their relationships with each other.”

Be dynamic. “Each deal is different and each transaction has its own story. Treat each one like the individual that it is. The devil is in the details, and there is no one-size-fits-all approach.”

]]>http://lodgingmagazine.com/jll-managing-director-breaks-down-barriers/feed/0The Developing Story: San Josehttp://lodgingmagazine.com/the-developing-story-san-jose/
http://lodgingmagazine.com/the-developing-story-san-jose/#respondFri, 29 May 2015 19:09:12 +0000http://lodgingmagazine.com/?p=18718Booming business in the Silicon Valley and a thriving sports scene are fueling growth in this Bay Area city. The largest city in the Bay Area, San Jose has been a beneficiary of the economic boom surrounding the technology and software development companies of California’s Silicon Valley since the mid 1990s. With this sector of the economy still experiencing rapid growth, and real estate options all but exhausted in neighboring Santa Clara and Sunnyvale, San ...

]]>Booming business in the Silicon Valley and a thriving sports scene are fueling growth in this Bay Area city.

The largest city in the Bay Area, San Jose has been a beneficiary of the economic boom surrounding the technology and software development companies of California’s Silicon Valley since the mid 1990s. With this sector of the economy still experiencing rapid growth, and real estate options all but exhausted in neighboring Santa Clara and Sunnyvale, San Jose is now in the position to become home to a slew of new companies, which is causing demand to skyrocket. According to Mukesh Mowji, cofounder and CEO of Pracrea, a company that facilitates commercial real estate transactions in the Silicon Valley, “The Silicon Valley is at an all-time high in terms of RevPAR growth, and nothing indicates a slowdown.”

Beyond the vast growth of tech startups and social media behemoth’s like Facebook, there are other factors driving the sharp uptick in San Jose’s lodging demand. One is the city’s active sports scene. San Jose is home to teams in both the National Hockey League and Major League Soccer—the Sharks at the SAP Center and the Earthquakes at Avaya Stadium, respectively. Also, only a few miles away in Santa Clara is Levi’s Stadium, home to the San Francisco 49ers, event venue, and, next year, host of Super Bowl 50.

Many of San Jose’s new hotel projects are on the higher end of the select-service spectrum and act as a complement to the city’s burgeoning downtown scene. Mark Fraioli, a vice president with the investment sales team of Jones Lang LaSalle’s Hotels & Hospitality Group, says, “The Silicon Valley worker is seeking cultural experiences, and these hotels are very interested in being a part of an urban mix where there is diversity and vitality.”

Presently among the big lodging projects in motion in San Jose are a 210-room AC Hotel and a Skyport Marriott SpringHill Suites & Residence Inn less than a mile from the San Jose airport.

STRAIGHT TALK ON SAN JOSE
Tarun Patel, cofounder and CFO of Pracrea, says that events at San Jose-area venues, as well as expanded office facilities, are going to fill San Jose hotel rooms for the foreseeable future. He explains how these facilities and venues will affect not only the hotel scene, but also the San Jose economy at large.

San Jose is a high-entry market right now, and as such the downtown area is projected to see a lot of infrastructure growth. Especially worth noting is that there are plans of expanding the Bay Area’s BART rapid transit system to San Jose’s downtown.

Beyond travelers looking to watch football, events held at Levi’s Stadium bring many travelers to San Jose. In March of this year, WrestleMania took place at Levi’s Stadium for the first time, and lodging in the whole city of San Jose was sold out. There were half a million people who traveled to see the event, and reportedly $100 million was infused into the Bay Area economy.

A developer is currently building 2 million square feet of office space within a stone’s throw of the San Jose airport, which will drive huge demand on weeknights that might not get a boost from the event venues.

]]>http://lodgingmagazine.com/the-developing-story-san-jose/feed/0The Developing Story: Charlestonhttp://lodgingmagazine.com/the-developing-story-charleston/
http://lodgingmagazine.com/the-developing-story-charleston/#respondTue, 21 Apr 2015 12:00:30 +0000http://lodgingmagazine.com/?p=18032With a charming culture and expanding economy, this city is a go-to destination for tourists and developers alike. Charleston may not be a top 25 market, but it sure acts and performs like one. The oldest city in South Carolina improves with age, boasting a long list of demand generators that drive hotel business. With its cobblestone streets, antebellum architecture, thriving arts and restaurant scene, pristine beaches, and rich history, Charleston is a renowned tourist ...

]]>With a charming culture and expanding economy, this city is a go-to destination for tourists and developers alike.

Charleston may not be a top 25 market, but it sure acts and performs like one. The oldest city in South Carolina improves with age, boasting a long list of demand generators that drive hotel business. With its cobblestone streets, antebellum architecture, thriving arts and restaurant scene, pristine beaches, and rich history, Charleston is a renowned tourist destination that consistently ranks as one of the top cities to visit in the country. “Charleston has traditionally been a good market, but it’s really taken off in the last few years,” says Jill Bidwell, vice president at PKF Consulting.

In addition to tourism, Charleston’s strengths include a highly diverse economy with a modernizing seaport and strong population growth. Thanks to Boeing, the city has also become an aerospace products and parts manufacturing hub that is responsible for an estimated 30,000 to 40,000 room nights each year, according to Bidwell. That demand could increase when Boeing adds a painting facility in late 2016.

During the expansionary phase of an economic cycle, developers favor high-rate markets, and ADR in Charleston has grown at or above national trends, says Ros Mallory, SVP for Jones Lang LaSalle’s Hotels & Hospitality Group. “That’s why people continue to look and want to build there,” Mallory says. “And the market absorbs new supply very well.”

Big hotel projects coming on line this year include the dual-branded Hyatt Place and Hyatt House Charleston/Historic District, which will bring 304 rooms to the vibrant Upper King area when it opens in June. The developers building hotels south of the Septima Clark Parkway on the peninsula are restricted by a 50-room limit per parcel, which means more boutique hotels are cropping up.

STRAIGHT TALK ON CHARLESTON
Mark Kessler, president and COO of The Kessler Collection, says it took 10 years to find the right piece of land to build on in Charleston. Come this June, the small boutique company will open the 50-room Grand Bohemian Hotel in Charleston’s Historic District at the corner of Wentworth and Meeting streets.

Charleston has great history, architecture, food, culture, and friendly hospitable people. It’s a very good market from an investment point of view; we can only build 50 rooms there, and we knew we would fill up.

We drew our design inspiration from the French Huguenots who settled in Charleston in the late 1600s. We’re really playing on the overall French elegance and mixing that with contemporary bohemian influences and finishes that would be indicative of the Lowcountry of the South.

We’re bringing our Grand Bohemian art gallery, featuring works by international, regional, and local artists. We’ll also have art featured in the public spaces, corridors, and guestrooms.

This will be the first hotel where we’ve done a wine blending room. We’ve partnered up with a vineyard out of Napa Valley, and we will be doing a 60- to 90-minute wine blending seminar.

]]>http://lodgingmagazine.com/the-developing-story-charleston/feed/0The Developing Story: Pittsburghhttp://lodgingmagazine.com/the-developing-story-pittsburgh/
http://lodgingmagazine.com/the-developing-story-pittsburgh/#respondTue, 10 Mar 2015 14:56:41 +0000http://lodgingmagazine.com/?p=17343Behind the steel curtain lies a hotel development scene set to explode this year. Here’s a quick guide to the many factors driving this growth. The City of Bridges is about to go through a bit of a growth spurt in hotel development. “The bulk of Pittsburgh’s supply increase is going to be realized this year,” says Tony Biddle, associate at PKF Hospitality Research. “Healthy demand should cushion the blow from the additional supply coming ...

]]>Behind the steel curtain lies a hotel development scene set to explode this year. Here’s a quick guide to the many factors driving this growth.

The City of Bridges is about to go through a bit of a growth spurt in hotel development. “The bulk of Pittsburgh’s supply increase is going to be realized this year,” says Tony Biddle, associate at PKF Hospitality Research. “Healthy demand should cushion the blow from the additional supply coming in, but probably drop off a point or two in occupancy for 2015, before recovering in the following years as that new supply is absorbed.” He points to the 248-room Hotel Monaco that recently opened and the 229-room Embassy Suites set to arrive at the top 11 floors of a downtown building in the fourth quarter. Other hotels coming to Pittsburgh’s urban core this year include a Hilton Garden Inn, a Hyatt House, a Homewood Suites, and a Holiday Inn Express & Suites.

A number of things are driving this building frenzy. “Pittsburgh’s done a good job of transforming its economy from industrial-based into what I’ll call meds and eds-based and then extending into related industries like pharma,” says Biddle. “It’s now home to nine Fortune 500 companies.” Another big boon for hotels has been the recent investments that have been made in sporting facilities like Heinz Field, PNC Park, and the Consol Energy Center. Now all Pittsburgh needs is a few more rivers and a winning sports franchise or two.

For the most part, Pittsburgh’s new hotel supply isn’t being built through massive city subsidies or tax breaks. The investors are picking submarkets where they can demonstrate healthy demand and meet it with a well-respected brand that isn’t expensive to build or operate.

The energy sector is the biggest driver when it comes to diversifying the area’s demand generators and increasing office space. Some of the most active shale natural gas drilling areas in the United States are around the city.

Upscale select-service hotels currently comprise the majority of properties on the drawing board in Pittsburgh. It’s worth noting that these are new builds, not conversions of existing properties.

That said, the boutique hotels being built in Pittsburgh are a sign that an increasingly sophisticated investor and developer base is looking at this market.

College, pro, and even high school sports are significant demand generators in Pittsburgh and can fill as much as 10 percent of the market on weekend nights.

]]>http://lodgingmagazine.com/the-developing-story-pittsburgh/feed/0IHG Said to Seek $1 Billion For Hong Kong Hotelhttp://lodgingmagazine.com/ihg-said-to-seek-1-billion-for-hong-kong-hotel/
http://lodgingmagazine.com/ihg-said-to-seek-1-billion-for-hong-kong-hotel/#respondMon, 17 Nov 2014 18:22:53 +0000http://lodgingmagazine.com/?p=15368InterContinental Hotels Group is seeking at least $1 billion from the sale of the InterContinental Hong Kong Hotel, according to a Bloomberg report. The company hired Jones Lang LaSalle to find a buyer for the Hong Kong hotel, people with knowledge of the matter said, and aims to complete the sale by March. The move would be in line with IHG’s asset-light business model. Revenue per available room at the 503-room property rose 5.4 percent ...

]]>InterContinental Hotels Group is seeking at least $1 billion from the sale of the InterContinental Hong Kong Hotel, according to a Bloomberg report. The company hired Jones Lang LaSalle to find a buyer for the Hong Kong hotel, people with knowledge of the matter said, and aims to complete the sale by March. The move would be in line with IHG’s asset-light business model. Revenue per available room at the 503-room property rose 5.4 percent in the third quarter on increased business from tour groups and corporate events. Originally opened in 1980 as the Regent Hong Kong, the hotel was previously owned by Hong Kong billionaire Cheng Yu-tung’s New World Development Co., which sold the property in 2001 for $346 million.

]]>http://lodgingmagazine.com/ihg-said-to-seek-1-billion-for-hong-kong-hotel/feed/0Lodging Execs Share Their Industry Roots, How They Got Aheadhttp://lodgingmagazine.com/lodging-execs-share-their-industry-roots-and-how-they-got-ahead/
http://lodgingmagazine.com/lodging-execs-share-their-industry-roots-and-how-they-got-ahead/#respondMon, 17 Nov 2014 15:59:10 +0000http://lodgingmagazine.com/?p=15341Hospitality is still an industry where the dishwasher can make it to the top—literally. In 2008, Lodging queried dozens of the industry’s top CEOs, asking them one question: What was your first job? Close to half cited dishwashing in restaurants and hotels. It’s now 2014, and the industry is immensely more complex and global than ever. Yet, the route to the top echelons of the industry remain open to those with the right mind-set and ...

]]>Hospitality is still an industry where the dishwasher can make it to the top—literally. In 2008, Lodging queried dozens of the industry’s top CEOs, asking them one question: What was your first job? Close to half cited dishwashing in restaurants and hotels. It’s now 2014, and the industry is immensely more complex and global than ever. Yet, the route to the top echelons of the industry remain open to those with the right mind-set and work ethic.

For this article, Lodging interviewed three hotel executives at the top of their game to look back over their careers and share their stories about the way up. Each represents a different area of the industry: Art Adler is managing director/CEO Americas for Jones Lang LaSalle’s Hotels and Hospitality Group (real estate transactions, advisory services, investment banking, and asset management), Walter Isenberg is CEO of Denver-based Sage Hospitality (ownership and management), and Tina Edmundson is global officer/SVP luxury and lifestyle brands for Marriott International. All three began humbly (two were dishwashers), and all quickly developed a vision of where they wanted to go and evolved the skill set to get there.

They would tell you they have the best jobs in the world and would not trade them for anything. Their message to anyone at any level in the industry, but particularly newcomers, is that passion, hard work, and flexibility are the keys to getting ahead.

AN APTITUDE FOR ACCOUNTING
Adler grew up in Paramus, N.J., the son of a German immigrant who would become an architect. “A normal kid with a public school education” is how Adler describes his youth. “Not a particularly notable school career. I really didn’t know what I wanted to do, like most high school kids.

“Because we were a very middle-class family, I always had to work, whether it was mowing lawns or whatever,” he continues. “My first job in the hospitality industry was washing dishes at a Howard Johnson. I was 14 or 15, and it was a minimum wage job.”

His next job, while still in high school, was a night houseman at a Holiday Inn in Paramus. “I would hang out with the front desk clerks and talk with them,” Adler says. “I learned how to use the front office equipment—a Holidex machine, the NCR 4200 electronic cash register, and the switchboard. And so I became a front desk clerk.”

Still not knowing what he wanted to do, Adler enrolled at a small state school and continued to work in hotels. Fate turned when the young woman working the desk for her summer job told Adler about Cornell University’s School of Hotel Administration, which she attended. He applied and was accepted.

“Looking back, my grades were OK and my SAT scores fair at best,” he says, “but I was a really good candidate. All my jobs growing up were in hospitality—whether it was washing dishes, bussing tables, cleaning rooms, or working the front desk. I already had an interest and passion in hospitality, and they saw that.”

Did Adler know then that he was on his way to heading up a major hotel real estate transactions firm doing deals annually totaling more than $10 billion?

“Of course not,” he answers. “I didn’t even know what hotel real estate was. Even when you’re at Cornell, most people think they are going to be in hotel management.”

Adler spent his summers working at Catskill resorts, learning enough to know he didn’t want to be in food and beverage and to recognize his aptitude for accounting.

“When I got out of school, I really wanted to work in consulting, because I had an aptitude for the numbers side of the business,” he says.

However, he didn’t land a consulting job at first and, instead, went to work in the front office of the 2,100-room New York Hilton as a management trainee, working his way up through the rooms side of the business. A key move came when he became an assistant operations analyst at the Hilton. “It was like being an internal consultant. You worked directly for the general manager, and you analyzed the profit and loss statements and various departments, focusing on payroll, overtime, big investment items, like china, glasses, and special projects.”

At age 23, Adler took over as head operations analyst, a position that required him approximately once a month to serve as weekend manager of the hotel. However, to proceed further in the hotel’s management hierarchy required a return to pure operations, something Adler didn’t want.

Instead, he applied again to Laventhol & Horwath, the accounting firm to which he originally applied directly out of college. “They literally hired me on the spot. That was 1980.

“That backed me out of operations to more the real estate side,” he says. “That’s where I learned that side of the business. At that time, you really didn’t learn that at Cornell.”

The 1980s and ’90s saw Adler working for Laventhol & Horwath, Sonnenblick Goldman, Coopers & Lybrand, and, in 2000, Jones Lang LaSalle. He was 43 at the time, and JLL’s hotel real estate head, Peter Barge, was working on creating a global hotel real estate transaction firm with divisions in Europe, the Americas, Australia, and Asia. Adler took the job as head of the Americas for the London-based company where he has been ever since.

“I felt I could go in and make a difference coming into such a terrific platform, especially since I was used to a larger platform, both at Laventhol & Horwath and Coopers & Lybrand,” he says. “I turned out to be correct—it was and is a leading hotel transaction platform and continues to be. Today, we are about 110 people in the Americas and about 275 globally.”

]]>http://lodgingmagazine.com/lodging-execs-share-their-industry-roots-and-how-they-got-ahead/feed/0Jones Lang LaSalle: New York Hotel Market Overviewhttp://lodgingmagazine.com/jones-lang-lasalle-new-york-hotel-market-overview/
http://lodgingmagazine.com/jones-lang-lasalle-new-york-hotel-market-overview/#respondMon, 03 Nov 2014 18:36:39 +0000http://lodgingmagazine.com/?p=15049The New York lodging sector is among the highest performing markets in the world. Hotel occupancy among upper-tier hotels went nearly uninterrupted during the economic downturn, and, as a result, RevPAR increases have been driven mostly by rate growth, says Jones Lang LaSalle (JLL). The robust performance of this gateway market results in continued investment by both domestic and off-shore buyers. While the market faces a supply pipeline of 15,000 new rooms through 2017, resulting ...

]]>The New York lodging sector is among the highest performing markets in the world. Hotel occupancy among upper-tier hotels went nearly uninterrupted during the economic downturn, and, as a result, RevPAR increases have been driven mostly by rate growth, says Jones Lang LaSalle (JLL). The robust performance of this gateway market results in continued investment by both domestic and off-shore buyers. While the market faces a supply pipeline of 15,000 new rooms through 2017, resulting in annual increases above the long-term average, investors remain confident in the strength of the market as they continue to take positions in New York’s lodging sector, the company states.

According to JLL’s outlook, hotel investment in New York is being driven by pent up demand, the availability of high-quality product, and access to capital. While supply is set to increase faster than the long-term average from 2014–2017, demand increases are expected to mirror supply growth in that period. JLL expects hotel values to see continued growth as investors from around the world pursue the New York lodging sector.

Watch the video above for JLL’s New York hotel market overview. The infographic below details market fundamentals, as well as transaction, financing and supply activities.

]]>http://lodgingmagazine.com/jones-lang-lasalle-new-york-hotel-market-overview/feed/0The Return of CMBS: It’s a Great Time to Be a Borrowerhttp://lodgingmagazine.com/the-return-of-cmbs-its-a-great-time-to-be-a-borrower/
http://lodgingmagazine.com/the-return-of-cmbs-its-a-great-time-to-be-a-borrower/#commentsThu, 29 May 2014 14:39:43 +0000http://lodgingmagazine.com/?p=11809After teetering on the brink of extinction only a few years ago following the downturn in 2008, Commercial Mortgage-Backed Security (CMBS) loans are now making a big comeback and all signs indicate that the timing couldn’t be better for would-be borrowers. Insiders agree that CMBS is one of the biggest stories in hotel funding. “In 2007, CMBS issuance was at $230 billion, then it virtually disappeared,” says Kevin Davis, executive vice president of the hotel ...

]]>After teetering on the brink of extinction only a few years ago following the downturn in 2008, Commercial Mortgage-Backed Security (CMBS) loans are now making a big comeback and all signs indicate that the timing couldn’t be better for would-be borrowers.

Insiders agree that CMBS is one of the biggest stories in hotel funding. “In 2007, CMBS issuance was at $230 billion, then it virtually disappeared,” says Kevin Davis, executive vice president of the hotel investment banking platform at Jones Lang LaSalle (JLL). “It started to make a comeback in 2010 and 2011, and we had $86 billion in CMBS issuance in 2013. This year, some market observers believe it could hit $130 billion.”

The landscape is different than it was. Davis states that there are 37 CMBS lenders now on the scene. “Underwriting is a lot healthier now,” he says. “Prior to 2008, loans were being sized on pro forma value projections. Now LTVs are based on actual values, not pro forma values. Certainly, relative to 2008, lenders are being more conservative in their underwriting. We’re in a 65 to 75 percent LTV environment, but there’s a lot of competition as more and more players are getting into the game, so lenders are becoming increasingly aggressive with LTV rates.”

Banks offer floating rates while CMBS can offer fixed and floating rates, which are now low relative to historical averages. “Both five- and 10-year fixed rate deals can be financed in the mid-4 percent range, and low leverage floating rate deals can be financed at LIBOR plus 200 base points or an all-in floating rate of 2.15 percent,” Davis says. JLL reports that in some cases, floating rate CMBS loans are being originated at leverage levels as high as 80 percent LTV for quality assets, which compares to up to 65 percent leverage for banks. So CMBS is a particularly attractive option. “Currently, floating rate CMBS is cheaper than bank capital,” Davis adds. “CMBS lenders are winning assignments that banks typically received in the past.”

The uptick in CMBS is also significant because it follows several years of improving real estate fundamentals, accommodative federal reserve policy, and the improved health of the banking sector. JLL reports that the cost of floating rate debt generally moves with changes with RevPAR, making it an attractive financing vehicle right now. “From a fundamental perspective, we’re in a good spot. We’re cautiously optimistic that this will be a longer hospitality growth cycle, perhaps nine years, because fundamental economic growth has been slow and steady,” Davis says. “On the asset side, we’re in our fifth consecutive year of RevPAR growth, so it’s possible that this could be a longer recovery with four-plus years of growth remaining in this cycle. Between 2015 and 2017, we’ll start to see maturities peak, so this cycle still has a ways to run its course.”

Both Fitch Ratings as well as Trepp, the information and analytics company which tracks CMBS, report that CMBS delinquencies are at their lowest levels in over four years. Fitch states that CMBS delinquencies should continue to recede and loan resolutions should remain strong due to the fact that share of real estate owned assets (REOs) are at an all time high; on balance, representing 45 percent of total outstanding delinquencies. Trepp reports that it sees continued growth in the CMBS industry in part because there’s lots of capital, and the slow growth since 2007 has created more opportunities to initiate projects, particularly in major markets, since they won’t be held up by supply distortions.

JLL believes that the CMBS market will continue to improve as more players enter the ring and create robust competition. The continued positive growth in RevPAR means that lenders will have increasing confidence toward the hotel sector. This is all good news for borrowers. Davis adds, “It’s an outstanding time to be a borrower and a difficult time to be a lender because the lending landscape has gotten so incredibly competitive.”

]]>http://lodgingmagazine.com/the-return-of-cmbs-its-a-great-time-to-be-a-borrower/feed/1Philadelphia Hotel Market is Buzzing With Activityhttp://lodgingmagazine.com/philadelphia-hotel-market-is-buzzing-with-activity/
http://lodgingmagazine.com/philadelphia-hotel-market-is-buzzing-with-activity/#respondMon, 27 Jan 2014 15:00:35 +0000http://lodgingmagazine.com/?p=9262Could the City of Brotherly Love the next hot hotel market? Philadelphia might be known for its arts and entertainment, restaurants, history, and passionate sports fans, but now it’s also being recognized for its bustling hotel activity, with red-hot openings and exciting new developments on the horizon. According to 2013 data from Jones Lang LaSalle, a hotel investment, advisory, and asset management firm, there are 361 hotels in Philadelphia with 45,390 rooms, making it one ...

]]>Could the City of Brotherly Love the next hot hotel market? Philadelphia might be known for its arts and entertainment, restaurants, history, and passionate sports fans, but now it’s also being recognized for its bustling hotel activity, with red-hot openings and exciting new developments on the horizon.

According to 2013 data from Jones Lang LaSalle, a hotel investment, advisory, and asset management firm, there are 361 hotels in Philadelphia with 45,390 rooms, making it one of the 25 largest hotel markets in the country. The average daily rate of a room in the city is $119 with occupancy averaging 67 percent.

Philadelphia’s economy is largely sustained by the education and healthcare sectors, and plays host to some of the top schools and medical facilities in the country, including the University of Pennsylvania and Thomas Jefferson University Hospital. The city is also seeing a surge in technology jobs, and the 2011 completion of the Pennsylvania Convention Center expansion has bolstered business travel to the region.

“Philadelphia’s ever-growing ability to dine, shop, and enjoy first-rate entertainment has recently captured the attention of a global audience of business and leisure travelers making it an unparalleled tourist destination,” says Carl Dranoff, president of Dranoff Properties, a commercial development company that recently announced plans to build a 47-story SLS Hotel and Residences at Broad and Spruce streets in the city. “As I have often said, Philadelphia is an overnight sensation after two decades of work by [the tourism bureau] Visit Philly.”

Philadelphia is strongly represented with long-standing luxury brands such as Four Seasons, the Rittenhouse Hotel, and the Ritz Carlton. Kimpton has also made its mark on the boutique scene with the Hotel Palomar in Rittenhouse Square and the 2012 opening of the Hotel Monaco in the Old City neighborhood, located across the street from Independence Hall. Home2 Suites by Hilton also opened its largest hotel in Philadelphia in 2013.

Dranoff describes the SLS development, as a “game changer.” The project, which is expected to break ground in 2014 with an opening planned for 2016, is being designed by Kohn Pederson Fox Association, and will be the tallest residential building in Pennsylvania. It will feature 150 rooms, a landscaped sundeck, an 85-foot indoor pool, and a full-service spa, and 125 luxury condominiums.

The hotel’s location on the Avenue of the Arts, is something that Dranoff believes will pay off. “I look at the Avenue of the Arts as a progression,” he says. “Its initial development as a center for culture and the performing arts set the table for me. The history and culture of the Avenue’s neighborhoods were chief among the reasons why we made our initial investment on South Broad — and why we continue to do so today.”

Although the SLS announcement generated plenty of buzz for Philadelphia, a planned Starwood dual-branded property is even more noteworthy. The combined 240-room W Hotel and 460-room Element by Westin, which will be located on Chestnut Street, will bring 700 rooms to the supply chain. The project has stirred some controversy because city council awarded a $33 million tax break to Chestlen Development to get the project off the ground.

Despite some opposition by other Philadelphia hotel owners, the Starwood project is expected to provide more overnight options for convention attendees when it opens in 2017.

“The next couple of years are going to be slow convention years for us,” says Ed Grosse of the Greater Philadelphia Hotel Association. “We need to make sure we have our convention center operating on all cylinders in time for this growth.”

It’s important to note, according to Jones Lang LaSalle, that Philadelphia supply increased faster than demand in 2013, resulting in flat revenue. But analysts at the firm believe that the lull is only temporary.

Mark Purcell, vice president of managed hotel development at Starwood, seems to agree. “We have a long history operating in Philadelphia and we’re optimistic about the city’s future growth and ongoing development,” he said in a statement. “We believe this project will help to raise the city’s profile as a leading destination for convention and meeting planners around the world.”

]]>http://lodgingmagazine.com/philadelphia-hotel-market-is-buzzing-with-activity/feed/0Detroit Hotel Market is Shifting Gearshttp://lodgingmagazine.com/detroit-hotel-market-is-shifting-gears/
http://lodgingmagazine.com/detroit-hotel-market-is-shifting-gears/#respondTue, 30 Jul 2013 21:03:26 +0000http://www.lodging.dreamhosters.com/?p=2353Following three years of consecutive RevPAR growth and occupancy gains, Detroit has repositioned itself as a key hotel market. With the ongoing recovery of the auto industry and revival of the downtown corridor, hoteliers are starting to see Detroit as a viable option for investment success. “If you take a look at lodging trends since 2010 on a year-end basis, Detroit has kind of been a shining star,” says Adam McGaughy, managing director at Jones ...

]]>Following three years of consecutive RevPAR growth and occupancy gains, Detroit has repositioned itself as a key hotel market. With the ongoing recovery of the auto industry and revival of the downtown corridor, hoteliers are starting to see Detroit as a viable option for investment success.

“If you take a look at lodging trends since 2010 on a year-end basis, Detroit has kind of been a shining star,” says Adam McGaughy, managing director at Jones Lang LaSalle Hotels. In 2011, Detroit saw a gain in RevPAR of 13.6 percent as compared to an 8.1 percent rise in the United States. In 2012, RevPAR was up 7.1 percent in Detroit with a U.S. average of 6.8 percent. And the city continues to show signs of growth this year with RevPAR up 7.4 percent thus far. A lot of that growth is focused on the occupancy side, McGaughy explains. “In 2010, occupancy gained 13.1 percent over 2009. In 2011, the city saw another 10.3 percent gain,” he says. “That’s a big chunk of occupancy growth over a two-year period.”

Positive trends in the auto industry have brought more business travelers into Detroit hotels, but the consolidation of the sports facilities downtown and the major renovation taking place at Cobo Center, Detroit’s main convention facility, are also having a positive impact. “Weekends are picking up in terms of tourism,” says McGaughy. “People want to take advantage of a lot of built-in demand generators.”

New supply is slowly creeping into the market, due in part to investors taking advantage of distressed assets. A 136-room Aloft hotel is being developed in the historic David Whitney Building and is expected to open in 2014, and the 367-room Detroit Riverside Hotel, originally known as the Pontchartrain, was purchased and will reopen as a Crowne Plaza this summer.

“The city has been very, very proactive in the past in terms of offering options for developers coming in,” says McGaughy. “Developers are confident in where the overall hotel market is and feel that they can get a return on their investment for new supply.”